The role of interest rate and inflation on oil stock prices: Evidence from Ukraine-Russia war

Document Type : Research Paper

Authors

School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran

Abstract

This paper presents an empirical investigation to study the effect of interest rate,  inflation and gold price on stock price by considering the historical monthly prices from October, 2021, to October, 2022. The study also uses the prices of Exxon Mobil Corporation as the biggest oil producer in the United States for the same period. The study uses monthly 10-year Treasury-Yield, inflation and gold price for the same period. The study uses multiple linear regression and finds that two independent variables of inflation and interest rates influence oil price positively while gold price has no meaningful effect on oil price. In our survey, Interest rate is the most determinant of the price of Exxon Mobil share price (β = 11.66, t= 9.22) followed by Inflation (β = 6.506, t= 15.69) when the level of significance is one percent. The survey also investigates OPEC+ as well as the United States government actions during the study and finds minor influence on share price. The results indicate that any short-term interruption of oil price may lead to short to medium term on share price increase while the effect appears to have reverse effect on economy and slows down the world’s economy and in longer periods causes oil price reduction.  

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References

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Journal of Industrial and Systems Engineering
Volume 14, Issue 4 - Serial Number 4
November 2022
Pages 174-181

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History

  • Receive Date: 06 March 2023
  • Revise Date: 26 April 2023
  • Accept Date: 26 April 2023

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